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Google opened an R&D center in the world's most populous country this month. Of China's 1.3 billion people, roughly 100 million of them are already online (30% with broadband connections) There are 350 million cellphone users (entire US population: about 296 million).
The CEOs of both Yahoo and eBay have both stated that they expect China to comprise the largest part of their businesses within 10 years. It's no wonder many tech titans are salivating over this market. As part of their strategy to establish themselves in China, Google hired one Dr. Kai-Fu Lee, a computer scientist who's enormously respected in China, to head their research center and serve as President of Google's Chinese operations.
The problem was that Dr. Kai-Fu Lee was hired away from Microsoft and continues to be under a non-compete agreement with them. Microsoft has filed suit, seeking monetary damages as well as an injunction upholding the non-compete clause of Lee's contract. This includes barring him from sharing Microsoft trade secrets.
Google, in turn, counter-sued Microsoft, asking the court to declare Microsoft's non-compete clause invalid. Clearly, the fight is not over Dr. Kai-Fu Lee or any non-compete agreement, but over who's going to come out on top in what is rapidly shaping up to be the world's largest market for search.
This is a huge coup for Google. Any monetary damages received by Microsoft will be paltry by comparison. Whatever the settlement, it's likely to be far less than the monetary advantages of having Dr. Kai-Fu Lee lead Google into the burgeoning Chinese search market.
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